Free Guide · Business Tax Strategy
The Self-Employed Tax Strategy Playbook
9 strategies that save profitable business owners $15K–$50K+ per year
Most CPAs prepare returns. Almost none design the year before the return is filed. If you're earning $80K+ in business profit and your CPA hasn't talked to you about half the strategies in this playbook, you're overpaying. These are the moves that matter — in order of leverage.
What's inside (11 pages)
- The S-Corp election: how to cut self-employment tax by $8K-$20K+
- Solo 401(k), SEP, SIMPLE, Cash Balance — which fits your business
- The Augusta Rule (Section 280A) — $10K-$50K in tax-free home rental income
- Hiring your kids: tax-free family wage transfers
- Accountable plan reimbursements (home office, vehicle, cell, internet)
- HSA triple tax advantage strategy
- Cost segregation on real estate — $50K-$300K year-1 deductions
- Exit planning strategies that need 3-5 year runway (QSBS, CRTs, ESOPs)
Who it's for
Self-employed professionals and business owners earning $80K+ in profit. Especially relevant for service businesses, consultants, real estate investors, and S-Corp eligible LLCs.
What you'll learn
The S corporation election comes first
If you are an LLC or sole proprietor clearing about eighty thousand dollars or more in profit, this is the single largest saving available. Pay yourself a reasonable salary and take the rest as distributions, which are not subject to the fifteen point three percent self employment tax. Typical saving is eight to twenty thousand dollars a year, against a few thousand in added payroll and filing cost.
Pick the retirement plan that matches the business
A solo 401(k) for an owner only business, with the highest limit and the most flexibility. A SEP IRA for the simplest setup, with the same percentage owed to any employees. A SIMPLE IRA for a small team. A cash balance plan for an owner over 45 who wants to shelter well over one hundred thousand dollars a year on top of a 401(k).
The Augusta rule and hiring your kids
Section 280A lets you rent your home to your business up to fourteen days a year, deductible to the business and tax free to you, for real meetings at a fair daily rate with an agenda to prove it. Paying your children for real work in the business is deductible to you and often tax free to them, and the wages can fund a Roth IRA in their name.
Accountable plans and the HSA
A written accountable plan lets the business reimburse you tax free for the home office, phone, internet, and mileage, which is cleaner than deducting them personally. An HSA is the only account with three tax breaks: deductible going in, tax free growth, tax free out for medical. It requires a high deductible health plan.
Vehicles, real estate, and the exit
Vehicles over six thousand pounds used mostly for business can be depreciated aggressively in year one. Cost segregation on a building you own front loads deductions that were spread over decades. And if you might sell the business within five years, qualified small business stock, installment sales, and charitable remainder trusts need to be set up now, not the year you sell.
Common questions
When should I switch to an S corporation?
A common rule is when net profit passes about eighty thousand dollars a year. Below that the added payroll and filing costs eat most of the saving.
What is a reasonable salary for an S corp owner?
What you would pay someone else to do your job. The IRS looks for a salary that is too low. Document how you set it each year.
Which retirement plan lets a self employed person save the most?
A solo 401(k) for an owner only business. A cash balance plan on top of it can shelter far more for an older, high earning owner.
Do I need to replace my CPA to use these strategies?
No. Most of them are set up during the year and your CPA applies them on the return. We coordinate with your CPA rather than replace them.
Educational content only. Not financial, tax, or legal advice. Always consult a licensed professional before acting on the information in this guide.